Capital Importation Drops by 82% to $1.57 Billion

Capital importation into Nigeria has fallen by 81.46 per cent ($6.91bn) from $8.49bn in the first quarter of 2019 to $1.57bn in the corresponding quarter of 2022, according to data from the National Bureau of Statistics.

Based on the NBS’s ‘Nigerian Capital Importation’ reports for the first quarters of 2019, 2020, 2021, and 2022, there has been a steady decline in capital inflows into the nation.

Total capital inflow fell by 31.01 per cent from $8.49bn in Q1 2019 to $5.85bn in Q1 2020; it fell by 67.45 per cent to $1.91bn in Q1 2021; and further declined by 17.46 per cent to $1.57bn in Q1 2022.

According to the statistics body of the nation, capital importation data is obtained from the Central Bank of Nigeria and includes imported physical capital, such as equipment, and financial capital importation.

It explained that it is divided into three main investment categories: foreign direct investment, portfolio investment, and other investments.

In Q1, 2019, the largest amount of capital imported into the nation was through portfolio investment. The banking sector dominated inflows that quarter and the United Kingdom was responsible for most of the inflows. In Q1 2020, portfolio investments continued to dominate inflows while banking and the UK also retained their respective leadership positions.

In Q1 2021 and Q1 2022, portfolio investments was responsible for most of the capital inflows into the nation, while banking raked in the highest and the UK provided the most.

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During a recent Monetary Policy Committee, the CBN Governor, Godwin Emefiele, disclosed that an unconducive domestic investment climate is impacting capital inflows into the nation.

He said “The net FDI has been very low while there was a substantial reversal of FPI flows from the country in the fourth quarter of 2021.

“This poor trend is apparently due to the unconducive domestic investment climate which appears to be worsening. In February 2022, such inflows stood at $17.6bn compared with $66.4bn in February 2021, the highest since December 2020.

“The risk factors include increased uncertainty surrounding the inflation outlook in the advanced economies, uncertainty over tapering plans by the US Fed, the regulatory developments in China and its real estate market-related systemic risk, and uncertainty regarding the Russia-Ukraine war and the resulting sanctions imposed on Russia. These factors have weighed down investor sentiment.”